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Real estate industry

Inovalis Real Estate Investment Trust Announces Sale of French Property

Strategic Insights

— 2 min read

Inovalis Real Estate Investment Trust (REIT) has announced plans to sell a single asset in Paris, France, located at 24-26, Rue Benard - 25, Rue Hyppolite Maindron - 27-29, Rue de la Sabliere. The sale is set to take place after the upcoming special meeting of unitholders on September 4, 2024, where unitholders will vote on the Sabliere Sale Resolution. The REIT has entered into a non-binding letter of intent with Inovalis S.A., the manager of the REIT, to sell the property at a price of EUR17,500,000 (C$0.41 per unit on a per unit net of debt basis). The sale is expected to generate net proceeds of EUR9,333,312.

Key Takeaways:

  • The REIT has entered into a non-binding letter of intent with Inovalis S.A. to sell the Parisian property at EUR17,500,000.
  • The sale is subject to the parties entering into a definitive purchase agreement and receiving the necessary approvals from the special meeting of unitholders.
  • The REIT receives four prior offers from third parties, including Alternative Offer #1 for EUR18,000,000 and Alternative Offer #2 for EUR19,000,000.
  • The net proceeds from sale with the Purchaser (Inovalis S.A.) is superior to the prior offers, considering the deterioration in market conditions and higher sales costs.
  • The Sale to Inovalis S.A. will generate net proceeds of EUR9,333,312, compared to EUR7,257,312 with Alternative Offer #2 and EUR7,437,312 with Alternative Offer #4.
  • The REIT's management believes the sale will be beneficial for the REIT due to the superior net proceeds, but there is the risk of a possible failure to realize the expected returns.
  • The Sabliere Sale Resolution must receive the affirmative vote of not less than a majority of the votes cast by unitholders at the special meeting, with the exception of excluded unitholders.

Statistics:

  • Sale price: EUR17,500,000
  • Net proceeds from sale with the Purchaser: EUR9,333,312
  • Net proceeds from sale with Alternative Offer #2: EUR7,257,312
  • Net proceeds from sale with Alternative Offer #4: EUR7,437,312
  • Broker fees: 2.5% by seller
  • Deposit: 5-10%
  • Loan Breakage Costs (SWAP): 0.5%
  • Advisory fees: 1.0%
  • Legal Fees: 0.2%
  • Withholding Tax: 15%
  • Mortgage Loan reimbursement: EUR8,842,500

Sources:

  • Press release from Inovalis Real Estate Investment Trust, dated August 30, 2024
  • Inovalis Real Estate Investment Trust's management information circular dated August 1, 2024
  • Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions
  • www.sedarplus.ca

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